ISE pressing for German-based options in U.S.

By Jonathan Spicer

NEW YORK (Reuters) - The International Securities Exchange hopes regulators will for the first time allow U.S. investors to trade options on the benchmark German DAX index, its chief executive said on Tuesday.

The ISE, the second-biggest U.S. options market, sees its ownership by Germany-based derivatives exchange Eurex as an advantage over domestic rivals as it branches out into new products.

"I think what's sexy to U.S. investors are mainstream benchmarks that they see in the newspaper, that they read about and know about," said ISE CEO Gary Katz.

"DAX is certainly the equivalent to the Dow, measuring the largest blue chip companies in Europe, and for that reason there is an interest in it," he said at the Reuters Exchanges and Trading Summit here.

The ISE filed a draft application to the Securities and Exchange Commission to list U.S. dollar-denominated options on the DAX. The exchange has discussed specifics of the application with the SEC "for some months now," it said.

"That filing is siting with the SEC at the moment, and when that does get approved, we believe that is a product that we have an advantage in because of our relationship with Eurex," Katz said.

Eurex -- which bought ISE in 2007 and is itself a unit of Deutsche Boerse (DB1Gn.DE) -- has options and futures on DAX stocks. Germany's benchmark DAX index comprises the 30 top equities in Europe's biggest economy.

The SEC does not now allow U.S.-based investors to trade Eurex-provided options, Katz said. A successful application would mark a regulatory shift in the United States.